Merchant Update: Readiness for UK Deferred Payment Credit Regulation

Purpose of this update.

This briefing is intended to give our merchant partners an update for the upcoming move from currently unregulated Buy Now, Pay Later arrangements to the new regulated Deferred Payment Credit (DPC) regime.

What is changing?

The UK regulatory framework for interest-free Buy Now, Pay Later (BNPL) products is changing. From 15 July 2026, Deferred Payment Credit, commonly known as BNPL, provided by third-party lenders to finance purchases or services from merchants, will become a regulated consumer credit activity. This means lenders will need to comply with relevant consumer credit rules, including requirements on customer information, affordability, fair treatment, complaints handling and support for customers in financial difficulty. As a regulated business since 2013, this is something that Payment Assist has already considered for some time.

Why is it changing?

The change is designed to strengthen consumer protection as the DPC market has grown. The new regime aims to ensure customers receive clear information before entering an agreement, only borrow where repayments are affordable and sustainable, and have access to appropriate support and redress if things go wrong. In practice, the regulation introduces more consistent standards across the customer journey while preserving the flexibility and convenience that merchants and customers value.

When is it changing?

Regulation begins on 15 July 2026. The FCA published its final rules on 11 February 2026. Agreements entered into before regulation day remain outside the new regulated DPC regime, but from regulation day new in-scope third-party DPC lending must meet the new requirements.

Our readiness position

We are well placed for this transition. As an already regulated UK finance firm, we have long-established governance, compliance oversight, risk management, customer support and regulatory reporting disciplines. Our teams have extensive market experience and are progressing the required operational, policy, systems, training and communications changes to support a smooth move into the regulated DPC environment.

How does this impact you as a merchant? FAQ’s

Do I need to become regulated as a merchant in order to keep offering DPC (formerly BNPL) loans?

• Firstly, there is no requirement for you as a merchant to become regulated as long as you continue to only offer DPC as an introducer.

Will the customer journey that we see be any different.

• No, the portal will remain the same in terms of the input required from yourselves.

 Can I still advertise the fact that we offer Payment Assist as a payment option.

• You can continue to advertise that Payment Assist is available as a payment option. However, any promotional material referring to Payment Assist must comply with the applicable regulatory requirements. To help ensure compliance, we will provide approved marketing templates and content, which you should use instead of creating or adapting your own materials unless we have given prior approval. We may ask you to amend or remove any existing promotional content that does not meet the updated requirements. Further guidance on the new requirements will be issued separately. Using our approved materials helps ensure that financial promotions remain fair, clear and not misleading and comply with the new regulatory requirements.

What should we do if we have any customer concerns regarding them taking loans out.

• If you identify any signs that a customer may be vulnerable or may need additional support, please refer them to Payment Assist for guidance before proceeding. We are here to help ensure customers receive the right information and support to make informed decisions.

What are the expectations regarding customers raising complaints?

• In some cases, a customer’s concerns may relate to both the goods or services provided by the merchant and the finance agreement provided by Payment Assist. Customers may also have rights to raise a claim directly with Payment Assist, including under Section 75 of the Consumer Credit Act 1974. Where a complaint affects both parties, it is important that we work together to achieve a fair and timely resolution. Please ensure that any relevant information is shared without delay and that established escalation procedures are followed so that the matter can be investigated efficiently and the customer kept appropriately informed.

In summary: Regulation is a positive step for the market. It introduces clearer protections for customers, greater consistency for firms and merchants, and a more sustainable basis for future growth. We are confident in our readiness and will continue working closely with merchants to ensure the transition is clear, controlled and commercially practical.